JSSI and CBA Group Provide “Tip to Tail” Coverage in China and Beyond

JSSI hosted an invitation-only Management and Maintenance Business Aircraft Conference in China in late 2013. The three-day event attracted 60 attendees and included a detailed analysis of how maintenance service programs help control costs and enhance resale value. At the conference, JSSI established its Choice Awards for “the Greater China region,” honoring the best companies in management, finance/leasing and maintenance; the winners will be announced here at ABACE.

As the number of business jets in the Asia Pacific region continues to grow steadily, so does the need for regular maintenance. As the market matures, operators are seeing the value of guaranteed maintenance plans such as those provided by Jet Support Systems Inc. (JSSI) in North America. JSSI is certainly among the best-known third-party maintenance plan providers, and it is making its presence known in Asia through a joint venture with the China Business Aviation Group (CBA Group).

For those not familiar with the business plan, JSSI offers different levels of maintenance coverage for aircraft owners and operators. The plans cover engines and airframes, as well as systems for scheduled and unscheduled maintenance events. The more comprehensive the plan, the more it covers, with corresponding increases in cost per month, flight hour or a combination of both. JSSI’s signature “Tip to Tail” program is its most inclusive, and includes coverage for items such as loaner engines and supplemental charter lift in the event of an unexpected “aircraft on ground” (AOG) situation.

Kevin Thomas, JSSI senior vice president of business development and strategic planning, told AIN the company chose to align itself with CBA Group for a number of reasons. CBA Group was founded in 2010 and has a solid background in business aviation best practices. Thomas said, “Jason Liao [CBA Group president and CEO] has been in the industry a long time, both in Asia and abroad. He understands how business aviation runs. It’s a good fit for us.” Besides its cooperative arrangement with JSSI, CGA Group also provides turnkey air charter, broker, management and insurance services.

JSSI has established as many as 40 individual contracts in China, and a total of up to 150 in Asia. “Most have been signed in the past three to four years,” said Thomas. Being an independent provider enables JSSI to cover virtually all makes and models of business jets and turboprops, including engines, airframes and auxiliary power units (APUs). That means that JSSI can tap the most convenient and cost effective source of service in the region.

For example, Thomas said, customers can go to Hong Kong, Singapore (particularly for Gulfstream service) and other vendors in the region as best fits their needs. For operators of airliner-based widebody business jets, airline maintenance departments are also available for service.

Logistical Issues

There are challenges to be met, however. The customs and import duties on parts can be an economic and logistical burden, said Thomas. “It can be tough to import parts without significant duty charges,” he said. Recent softening of restrictions has helped, as has loosening of airspace restrictions.

There are other logistical issues as well, Mark Winzar, JSSI vice president of technical operations, said, “Maintenance events and requirements are not really any different from what we see in Western markets, the challenge is the infrastructure and expertise to complete the required maintenance.

“As an example, if you need to do an engine change in China we’ll need to (a) find a facility that has capability to support, (b) arrange for a field service team to actually complete the job and (c) ensure all the logistics such as tooling have been arranged and will coincide with the planned event. As you can imagine, this is a lot more challenging that doing a simple engine change in a mature market such as the U.S. or Europe, not to mention the additional costs incurred.”

Simple scheduled inspections can also prove challenging. As an example, said Winzar, “Hong Kong is very limited for space, so expecting due maintenance to be completed quickly without planning and forewarning is nigh on impossible.” Maintenance slots need to be scheduled and this, again, is challenging compared with mature maintenance markets.

Another issue is low utilization. Winzar said, “Customers are buying a large aircraft that is meant to fly 400 to 500 hours a year, and it may be flying only 250 hours.” JSSI contracts call for a minimum utilization requirement. If that figure is not met, additional low-utilization inspections can be needed. “The risk for unscheduled maintenance spikes at a certain level,” said Winzar. “It’s not an issue for us if an aircraft flies 200 hours one year, 75 the next and back up to 200. But if it’s not being used much, it has to be preserved properly.”

JSSI’s penetration in the Asian market can be seen as a business indicator, according to Thomas. With the role it plays, the company’s level of activity in the region is a measure of the level of business aviation activity. To date, JSSI and its strategic partner, CBA Group, have been modestly successful. “The OEMs are projecting increases of 1,000 aircraft in the region in the next 10 years,” said Thomas. He added that time will tell if infrastructure improvements, bureaucratic relief and continued economic growth will create further opportunities for the expansion of business aviation in China and the rest of the Asian region.